2007 (8) TMI 259 - AT - Service Tax

Whether handling and terminal charges are part of the brokerage as per section 65(105)(a) of Finance Act - details of transaction charges issued from National Stock Exchange of India Ltd. was duly furnished held that handling charge is not in the nature of commission or brokerage for purchase of securities - They are incurred in connection with the delivery of scrips held that value of taxable services in respect of a stock broker will not include transaction charges and handling charges

Summary

Issues:
1. Interpretation of handling and terminal charges as part of brokerage services under section 65(105)(a) of the Finance Act, 1994.

Analysis:
The appeal arose from an Order-in-Revision passed by the Commissioner of Customs, Central Excise & Service Tax, Hyderabad, setting aside the dropping of demands by the Assistant Commissioner of Central Excise (ST) regarding handling and terminal charges collected by the assessee. The Commissioner held that these charges are part of brokerage as per section 65(105)(a) of the Finance Act, 1994. The learned consultant argued that a previous decision by the Bench in the case of First Securities (P.) Ltd v. CST supported their position based on similar findings.

The Departmental Representative reiterated the Department's views on the matter. Upon careful consideration, the Tribunal examined a previous judgment where it was clearly held that handling and terminal charges do not constitute part of brokerage services. The Tribunal referred to the definition of "brokerage" from Kohler's Dictionary for Accountants, emphasizing that handling charges are expenses incurred for handling shares on delivery and are not in the nature of commission or brokerage for the purchase of securities. The Tribunal concluded that the value of taxable services for a stockbroker does not include transaction charges and handling charges, as they are incurred in connection with the delivery of scrips and not brokerage services.

In line with the previous judgment's findings, the Tribunal set aside the impugned order and allowed the appeal with consequential relief, if any. The decision was based on the clear distinction between handling charges and brokerage services, as established in the cited judgment.